Coin vs Token

The distinction between coins and tokens is one of the most important yet frequently confused concepts in cryptocurrency. A coin (or "native coin") operates on its own independent blockchain — Bitcoin (BTC) runs on the Bitcoin blockchain, Ether (ETH) runs on Ethereum, and SOL runs on Solana. These coins are integral to their network's operation, used to pay transaction fees, reward validators/miners, and secure the network through staking or mining.

Tokens, by contrast, are created on top of existing blockchains using smart contracts. The most common standard is ERC-20 on Ethereum, which allows anyone to create a new token without building an entire blockchain. USDT (Tether), LINK (Chainlink), UNI (Uniswap), and thousands of other tokens exist as smart contracts on Ethereum. A single blockchain can host millions of tokens — Ethereum alone has over 500,000 ERC-20 token contracts. Other token standards include ERC-721 (NFTs), BEP-20 (BNB Chain), and SPL (Solana).

This distinction has practical implications for investors and users. When you send a token like USDT on Ethereum, you pay the gas fee in ETH (the native coin), not in USDT itself. When a project launches as a token on Ethereum but later develops its own blockchain, it performs a "token migration" — converting the old ERC-20 tokens to native coins on the new chain. Understanding whether an asset is a coin or token helps evaluate its technical fundamentals: coins face the challenge of bootstrapping an entire network, while tokens benefit from the existing infrastructure and security of their host blockchain but are dependent on it.